Clearing up misconceptions about marijuana rescheduling: What it means for existing state systems

As marijuana rescheduling has gained traction in Congress and DEA has announced it will rule on a rescheduling this summer, a common concern has emerged in the cannabis reform community and among industry actors. It goes something like this: “If marijuana is moved to Schedule II, the Feds will shut down our state’s legal system.” The worry is that this administrative change will make marijuana pharmaceuticals legal and thus require all such products to be removed from the market until FDA approval is granted. And of course, clinical drug testing and FDA approval often takes years and hundreds of millions (if not more) dollars in research—something cannabusinesses can’t afford and time medical marijuana patients don’t have.

Alas, these concerns are overstated. Rescheduling will not shut down the thousands of existing medical (or for that matter recreational) grows, processing facilities and dispensaries that serve people in about half of the U.S. There are a few reasons why this is the case and we will discuss each.

I. The legal authority keeping marijuana enterprises open has nothing to do with scheduling

The scheduling of drugs in U.S. comes from authority vested in the Congress and the executive branch under the Controlled Substances Act of 1970. Under this law, Congress or the relevant federal agencies make determinations about substances based on their medical value, safety for medical treatment, and likelihood of abuse. Under that law, the government assigns a drug to a schedule and has the power to reassign a substance to a different schedule (rescheduling).

The Controlled Substances Act does not authorize state-approved and regulated marijuana enterprises to remain open. In fact, the CSA explicitly outlaws any such enterprise. The authority under which cannabis enterprises continue to operate, despite the substance’s “absolute” prohibition under the CSA, is a series of memoranda issued by the U.S. Justice Department. These memos—the Cole and Ogden Memos—allow state-approved, heavily regulated operations to exist, so long as they do not violate certain areas of DOJ’s concern, such as selling to minors or engaging with drug cartels.

These memos are executive actions that assert a Supreme Court-approved power of the presidency: enforcement discretion. Enforcement discretion allows the president and officials in the administration to make choices–priorities–about how and under what circumstances laws will be enforced. The Obama administration has de-prioritized the enforcement of the CSA for marijuana in certain states under certain conditions. Nothing will change with regard to these memos if marijuana were rescheduled.

Furthermore, it is highly unlikely that the FDA would ever approve smoked, whole flower marijuana, even after rescheduling. Instead, cannabis pharmaceuticals will come in the form of tablets or liquids, made by isolating individual cannabinoids or compounds of cannabinoids. Currently, FDA has approved trials for two cannabis based drugs—Sativex and Epidiolex—that do exactly that. Worry exists that since FDA won’t allow whole flower marijuana, the existing system of grows and dispensaries will be closed. However, as explained above, FDA is not the entity that allows those grows and dispensaries to remain open and would have no power to reverse the administrative carve out currently allowing marijuana businesses to remain open.

II. If the federal government is ok with a Schedule I substance being sold in the states, they’ll be fine with Schedule II.

Currently, the federal government assigns marijuana to Schedule I, meaning that it is perceived to have no medical use and high potential for abuse. No Schedule I substance can be purchased legally in the United States. State marijuana programs, although technically illegal, have been afforded an administrative carve out. Federal deference to state laws have let medical and recreational products move forward in states where marijuana is legal, despite the fact that it is still illegal under the federal schedules.

Movement of marijuana from Schedule I to Schedule II means that the federal government will signal that marijuana is not as dangerous or useless as previously believed. The rescheduling would mean that the substance still has “a high potential for abuse” but that FDA-approved derivatives of the substance are available for prescription with the highest level of restrictions. Rescheduling will slightly relax the bureaucratic hurdles to research on the medical benefits or impacts of cannabis.

That’s it. Rescheduling does not automatically create an FDA-approved marijuana pharmaceutical, and does not create any new penalties for state-level marijuana businesses. Because rescheduling has no impact on the administrative deference that the federal government has given state programs, state-legal businesses would operate in exactly the same gray area post-rescheduling as they do now.

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In addition, it would be surprising for the government to designate cannabis as less harmful or dangerous via Schedule II and and subsequently shut down the state systems that were previously tolerated when marijuana was in Schedule I. The optics of such a shift would carry with it political consequences.

III. Marijuana operations stay open because of presidential prerogative, and that isn’t changing soon.

As mentioned above, Justice Department memos serve as the legal basis for the continued operation of marijuana enterprises. Rescheduling marijuana does not alter the nature, force, or consequences of those memos. In fact, rescheduling could reinforce the validity of those memos. The Obama administration was bold in issuing memos that ultimately demanded federal officials ignore the CSA with regard to cannabis, particularly given its Schedule I status. If cannabis is moved to Schedule II (or some other schedule), the administration’s memos will apply to a drug considered less dangerous than it was previously (see previous section). Thus, rescheduling offers the administration further justification for allowing marijuana enterprises to thrive.

The only situation in which state-legal marijuana enterprises would be threatened would be if the administration both rescinded the existing memos and intensified efforts to shutter those businesses. The president has given no signal that he intends to do this, and has very little interest in doing so. Since 2012 when the last of the memos was issued, Obama’s rhetoric on marijuana has grown only more reform oriented. Reversing the memos would be at odds with a very public metamorphosis at the presidential level. In addition, shuttering thousands of marijuana enterprises would put tens of thousands of people out of work, would reduce tax revenues to states, and would harm small business activity in a large swath of the United States. As a presidential election nears, the last thing any president wants to do is damage the economy. An economy-harming reversal on marijuana wouldn’t just hurt the industry, but it could harm Hillary Clinton’s chances of capturing the White House in November—an outcome Obama would deplore.

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Furthermore, it’s unlikely that the next president would bring a change of course. Both Hillary Clinton and Donald Trump have suggested that they are comfortable with the current hands-off/states’ rights approach to marijuana policy that the Obama administration has constructed. Thus, even after Obama has left office, his successor has signaled support for the memos that keep the industry afloat. And in the case of Hillary Clinton, she has explicitly argued for rescheduling AND support for legal state-based systems.

IV. A re-commitment to the Controlled Substances Act would be difficult, expensive, and possibly embarrassing

Even in a world in which Obama or his successor felt that in the wake of rescheduling all marijuana should run through FDA trials, the action required to shut down existing operators would be challenging. Part of the reason why the Ogden and Cole Memos were issued was the realization that shutting down significant numbers of marijuana businesses would require tremendous time and federal resources. As time passes, those costs increase and they will likely be even higher in the next administration.

If the president sought to shut down the existing medical and recreational systems and failed, the embarrassment would be significant and the backlash may be even stronger. President Obama will have very little interest in deploying a type of nationwide Pot-S.W.A.T. Team to try to dismantle a large and growing industry. It could undermine support for his administration in key states, and failure would signal weakness in ways that would hurt his legacy and hurt his party’s chances of keeping the White House (see above). Similarly, if, early next year, the new president sought to re-criminalize marijuana in legal states, they would likely be accused of squandering federal resources at best. At its worst, the actions would fail and the new president’s first hundred days would be marred with a policy failure stemming from gross administrative ineptitude—an image no new president wants.

So, even if a president wanted to pursue a policy of prohibition, the politics are too prohibitive.

V. Public opinion is clear, the dispensaries stay open

Beyond the potential embarrassment of a federal reversal on marijuana enforcement, public opinion on the issue is equally influential. Over 80 percent of Americans approve of medical marijuana, and support for that policy has only grown as more states have approved reform and implemented systems. In many ways, Americans have seen marijuana reform up close and their opinion has changed–to favor it.

The same is true of adult-use recreational marijuana. Over 50 percent of Americans support recreational legalization, with support much higher in many individual states. Support has grown dramatically over the past 25 years. Four states and the District of Columbia have approved recreational marijuana systems, during which time public support has only grown. The American public is not only supportive of marijuana reform but has quite comfortable with it now that they have seen it in action.

Public support creates a significant disincentive for this president or his successor to respond to rescheduling by shutting the whole thing down. Adherents to a variety of ideological commitments, from reforming criminal justice to balancing the budget, find common ground in marijuana reform. The realities of state budgets, economics, political optics, and simple public opinion push President Obama toward reform and away from prohibition, and will push his successor that way as well. Even in the face of marijuana rescheduling, the politics of the issue will keep the dispensaries open and the states left to their own (heavily regulated) devices.

VI. If rescheduling doesn’t close marijuana businesses, does it legalize them?

So you might be wondering; if rescheduling doesn’t impact state-legal markets, what does it do? In short, not much. FDA approval or lack thereof has no bearing on the administration’s enforcement discretion—of this president or any future president. But Schedule II does have implications for the future of medical marijuana research and for that reason an important step in harmonizing federal and state policy. There are fewer obstacles to conducting research on drugs in Schedule II for research than Schedule I. Rescheduling would send a powerful signal to the medical community that the government supports research into legitimate medical uses of cannabis, which is hardly the case currently. Rescheduling also puts administrative pressure on the DEA to relax the monopoly on cannabis available for research, another substantial obstacle. Opening the door to medical research would also be a powerful signal to the millions of Americans who use medical marijuana currently with little or no research-backed information. Recognizing that medical marijuana is a valuable subject for research is not an inconsequential statement for the government, and will eventually help millions of patients and families.

Beyond breaking down research barriers however, rescheduling has no impact on the status of state marijuana programs, and is unlikely to in the future.

VII. The products in state legal markets are very different than FDA-approved products

Rescheduling of marijuana would allow expanded pharmaceutical research into the substance and offer a more convincing foundation for the ultimate approval of cannabis-based pharmaceuticals. However, the marijuana sold on the shelves of a dispensary in Denver will look very different than a pharmaceutical sold at a Walgreens. And we already have evidence of that.

In some ways, there is a benefit to such a system for existing industry actors and patients and consumers who rely on more traditional cannabis products. While big pharma may move in on substances with isolated cannabinoids, running products through FDA trials and eventually putting such products on the shelves of traditional pharmacies, they would have no interest in exploring the types of products currently sold in state medical marijuana systems. Why? Because they know such substances would never be approved. Such a scenario would likely set up a bifurcated system of cannabis products. FDA-approved pharmaceuticals would be available in the nation’s drug stores and other cannabis products would be available in DOJ-approved dispensaries. Such policies are not mutually exclusive and the politics may make them the only viable outcome.

Ultimately, substantial amounts of misinformation exist when it comes to drug rescheduling. How it works, who is in charge and what the consequences of such a policy shift consume much conversation, particularly in the marijuana reform community. The confusion is understandable because rescheduling is complicated and has never been applied to a product like marijuana—one being sold pseudo-legally in the states. However, while the policy may be perplexing, the politics around marijuana is not. Rescheduling won’t shut down dispensaries nationwide, threaten the existing marijuana industry’s dynamics, nor create challenges for patient access. In fact, while rescheduling will be seen by many in the reform community and among scientific researchers as a resounding victory, the reality is that, day to day, most people will never notice the difference.

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